WORKING parents are being warned to make a quick check this Easter to ensure they don’t miss out on up to £2,000 in free cash.
It comes after hundreds of thousands of parents are thought to be missing out by not applying for tax-free childcare.
AlamyHundreds of thousands of parents are missing out on childcare help[/caption]
While 1.3million families are eligible for for the support, around 800,000 aren’t currently using the benefit, according to MoneySavingExpert.com.
Tax-free childcare can help pay for approved childcare for children aged 11 or under, or up to 16 if the child has a disability.
Parents receive up to £500 (or £1,000 if their child is disabled) every three months.
This means that for every £8 paid into their online account, parents will automatically receive an additional £2 top-up from the government.
It takes just 20 minutes to apply online for a tax-free childcare account.
The extra cash generated can be used to help pay for a child’s nursery, childminder, breakfast or after-school club or holiday activity club.
It can also be used alongside the 15 or 30 hours free childcare offer and to help pay for any specialist equipment needed for a disabled child when they’re attending childcare.
Myrtle Lloyd, HMRC‘s director general for customer services, said: “Springtime is a good opportunity to take a fresh look at family finances.
“A quick check online and you can find out how tax-free childcare can help cut the cost of your childcare bills.
“Every bit of financial support helps – I would urge families to visit Gov.UK to find out how you could be better off and open your account today.”
What is tax-free childcare?
Tax-free childcare is a government scheme where parents or guardians can get £2 free for every £8 put into an account.
Parents can get up to a maximum of £2,000 a year per child or £4,000 if their child is disabled.
The child has to be 11 or younger, or 16 if they are disabled.
The money must be used to pay for childcare, including nursery, childminders, and break or after-school clubs.
It can be used to pay for holiday care or an out of school activity too.
For example, if your childcare costs are £750 a month, you could pay £600 into your childcare account and the government would pay £150.
Not only are you covered each month, you’d be saving £1,800 a year per child.
It’s worth doing the math yourself to determine how much you should put into your account each month.
Who is eligible and how can I claim?
Whether you are eligible or not for tax-free childcare depends on your personal circumstances, including your income.
But, you can still get help if you are working, including if you are self-employed.
You and your partner must earn the equivalent of 16 hours a week at the national minimum or living wage.
But, if one of you earns over £100,000 or more a year, you won’t qualify.
This does mean you can qualify for tax-free childcare if you earn £99,999 a year or less, though.
Remember, you can claim tax-free childcare at the same as 30 hours of free childcare.
But you can’t claim under the scheme if you are on tax credits, Universal Credit or receiving childcare vouchers.
You can apply for the scheme online by visiting https://www.gov.uk/apply-for-tax-free-childcare.
The application process should take around 20 minutes, and you’ll need your National Insurance and Unique Taxpayer Reference (UTR) number to hand (if you are self-employed).
How do I claim free childcare?
ALL parents in England are entitled to 15 hours of free childcare per week.
Parents don’t need to apply as your childcare provider will do it automatically.
But you can only claim the free childcare if it’s through an approved provider and stops when your child starts school.
You can find a list of approved childcare providers on the government’s website.
Both parents must earn between £8,670 and £100,000 a year.
Three and four-year-old kids are also eligible for 30 hours of free childcare.
To claim, parents need to fill out an application form by visiting https://www.gov.uk/apply-free-childcare-if-youre-working.
Parents of two-year-old children can also get 15 hours of free childcare if they receive government support.
This includes those on various benefits, including Universal Credit or child tax credits.
Full eligibility criteria for free childcare can be found on the government’s website.